Sales Tax Act (III of 1951)---

----S.7---Sales Tax Notification No.7, dated 27-6-1951, item No.35--- Exemption---Lozenges being composition of medicine were exempted from payment of sales tax within meaning of Notification No.7, dated 27-6-1951, item. No.35.

Iqbal Naeem Pasha for Applicant. Sheikh Haider for Respondent.

Dates of hearing: 16th August, 1990 and 6th October, 1991.

JUDGMENT

IMAM ALI G. KAZI, J.--- M/s. Bhagwandas Mangharam are the manufacturers and vendors of "Jawahar Tikki". They claimed exemption from levy and collection of sales tax for assessment years 1968-69 to 1971-72 in respect of their such product under item No.35 of Sales Tax Notification No.7, dated 27-6-1951 as a drug under Unani and Ayurvedic medicine or drug. The Sales Tax Officer did not admit such claim and held that their product was liable to the payment of sales tax. They then filed appeals directly to the Tribunal. questioning such decision. They produced some evidence in the appeals before the Tribunal to show that their product was in fact drug and was used successfully by members of the medical profession for the treatment of certain diseases. They were; however, unsuccessful before the Tribunal and then moved the Tribunal to make a reference to this Court under section 17(1) of the Sales Tax Act, 1951. The Tribunal formulated the following question for such reference:--

"Whether "Jawahar Tikki" manufactured by the applicants was entitled to exemption within the meaning of entry No35 of Notification No.7 dated 27-6-1951 of the Sales Tax Act, 1951?"

Mr. Iqbal Naeem Pasha, the Advocate for the applicants; M/s. Bhagwandas Mangharam contended that the Tribunal disallowed exemption from the payment of sales tax on such product of the applicants on the ground that the product of the applicants did not conform to any specifications prescribed in the Pakistan Pharmacopoeia, International Pharmacopoeia or any other pharmaceutical codex or formulary in accordance with Allopathic, Unani or Ayurvedic systems. It was mainly on this score that their product was not treated as a "drug" or "medicine". According to him in absence of any definition of word "drug" or "medicine" in the Sales Tax Act, 1951 itself ordinary dictionary meaning of such words will be considered. He further pointed out that some definition of the word "drug" is given under section 3(g) of the Drugs Act, 1976. This definition by itself as is clear from its plain reading is not exhaustive as it includes certain substances mentioned in its sub clauses besides other substances. He further contended that the Notification granting exemption from the payment of sales tax on certain items specifically mentions the drugs and medicines including Unani and Ayurvedic medicines.

Mr. Sheikh Haider appearing for the respondent supported the reasons given by the Tribunal in the case. .

The word "drug" admittedly is not defined in Sales Tax Act, 1951.

Some definition of the word "drug" is contained in section 3(g) of the Drugs Act, 1976 which is reproduced below:--

"(i) any substance or mixture of substances that is manufactured, sold. stored, offered for sale or represented for internal or external use in the treatment, mitigation, prevention or diagnosis of disease, an abnormal physical state, or the symptoms thereof in human beings or animals, or the restoration, correction, or modification of organic functions in human beings or animals, not being a substance exclusively used or prepared for use in accordance with the Ayurvedic, Unani, Homoeopathic or Biochemic systems of treatment except those substances and in accordance with such conditions as may be prescribed;

(ii) abortive and contraceptive substances, agents and devices, surgical ligatures, sutures, bandages, absorbent cotton, disinfectants, bacteriophages, adhesive plasters, gelatine capsules and antiseptic solutions;

(iii) such substances intended to be used for the destruction or repulsion of such vermins, insects, rodents and other organisms as cause, carry or transmit disease in human beings or animals or for disinfection in residential areas or in premises in which food is manufactured., prepared or kept or stored;

(iv) such pesticides as may cause health hazard to the public;

(v) any substance mentioned as monograph or as a preparation in the Pakistan Pharmacopoeia or the Pakistan National Formulary or the International Pharmacopoeia or the British Pharamacopoeia or the British Pharmaceutical Codex or the United States Pharmacopoeia or the National Formulary of the United States, whether alone or in combination with any substance exclusively used in the Unani, Ayurvedic, Homoeopathic or Biochamic system of treatment and intended to be used for any of the purposes mentioned in sub-clauses (i), (ii) and (iii); and

(vi) any other substance which the Federal Government may, by notification in the official Gazette, declare to be a "drug" for the purposes of this Act."

Clause (i) of the above subsection generally defines word (drug) and specifically excludes such substances which are used as such in the Ayurvedic, Unani, Homoeopathic or Biochemic systems of treatment. The definitions of the word "drug" given in sub-clause (v) recognises certain substances exclusively used in Unani, Ayurvedic, Homoeopathic or Biochemic systems of treatment where used in combination with any of the drugs mentioned in such code. It therefore follows that certain substances when used in such systems when used in combination with substances recognised in other recognised systems will also be drugs. Drug according to ordinary dictionary meaning means any substance used in the composition of medicines while word "medicine" means any substance used for the treatment or prevention of diseases.

It appears that the Tribunal had considered only such substances which are used in the manufacture of drugs as are listed in respect of certain. medicines mentioned in certain codes of pharmacopoeia of different types. Such a definition may perhaps be relevant for the purpose of Drugs Act, 1976 only and in absence of any definition of the word "drug" in the Sales Tax Act such a meaning cannot be extended in its application under the latter enactment. It may further be stated that the Notification under consideration grants exemption from the payment of sales tax on "drugs" and "medicines" including Unani and Ayurvedie medicines and drugs" at Sr. No.35. It has never been the case of the Department that "lozenges" manufactured by the applicants known as "Jawahar Tikki" is not a drug under Unani or Ayurvedic systems of treatment of the disease particularly when the applicants produced evidence before the Appellate Tribunal about the use of product as drugs.

For the foregoing reasons we are of the view that "Jawahar Tikki", manufactured by the applicants, is entitled to exemption from the payment of sales tax within the meaning of entry No.35 of Notification 7 dated 27-6-1951 issued under the Sales Tax Act, 1951. and answer the question in the affirmative.

M.B.A./ /B-214/ Question answered in affirmative.